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Dollar shrugs off RBA's rate cut talk

The Australian dollar is higher on more positive sentiment around Europe and the US.

In late trade, the currency was buying 104.14 US cents, up from Monday’s close of 103.67 US cents.

National Australia Bank (NAB) currency strategist Emma Lawson said the local currency had opened the day higher, on positive news on the global economy.

‘‘There’s not a lot going on today, and there was a generally positive tone from overseas markets overnight anyway,’’ she said. ‘‘That was on the back of expectation that the US would deal with its fiscal situation, and that Greece would get its funding.

‘‘Equity markets are also positive across the region, so that’s slightly positive for the Australian dollar.’’

The fiscal cliff - a series of tax rises and spending cuts which are due to start in the new year - is a major challenge for the US economy, but comments from president Barack Obama over the weekend suggested that efforts to resolve the situation were going well.

Ms Lawson said the local currency had fallen slightly after the release of minutes from the Reserve Bank of Australia (RBA)’s November 6 meeting.

‘‘Initially the Aussie came off after the RBA minutes, because they said they might ease at some time in the future,’’ she said. ‘‘But really rates expectations haven’t changed a great deal over the day, and the Australian dollar has gone back up again. We’re now very close to where we started the day.’’

She added that the market would be watching for further hints of rate positioning, with RBA governor Glenn Stevens due to speak on Tuesday evening in Melbourne.

Also significant would be a meeting of eurozone finance ministers in Brussels on Tuesday, with the payment of a 4.4 billion euros ($5.46 billion) bailout to Greece on the agenda.